pressure is rising
Thanks everyone for sharing your thoughts.
For those who are interested a quick update of the current situation:
source: financial times online
COMPANIES & FINANCE INTERNATIONAL: EasyJet talks on DBA may collapse
By Jens Flottau in Munich
Financial Times; Feb 10, 2003
The takeover of Deutsche BA, the lossmaking German subsidiary of British Airways, by Easyjet, Europe's largest low-cost airline, is understood to be on the brink of collapse after failure to resume crucial talks with pilots.
Easyjet and the pilots of DBA have not yet been able to agree on the new wage contracts, which are based on conditions of employment for low-cost carriers.
At the same time, Easyjet is not prepared to enter into further negotiations and is understood to have stopped the meetings of both parties.
At asupervisory board meeting on Friday, Easyjet is expected to discuss the situation in the hopes of coming to a decision.
Easyjet acquired the option to take over DBA last summer as a way of breaking into the German market.
A takeover of DBA, the second-largest German scheduled airline, would give Easyjet a foothold in the German market where competition is rapidly intensifying in the low-cost sector.
The deal to sell DBA, which currently operates chiefly on domestic German routes, is worth between €30m ($32.5m) and €46m depending on when Easyjet exercises its option.
The decision on whether to go ahead depends on the outcome of negotiations with the Vereinigung Cockpit, the pilot's union.
"We want to make it very clear to you [the pilots] that DBA has no alternative looming in the background and that a withdrawal of Easyjet's option would seriously endanger every single job at DBA," said Martin Wyatt, the new chief executive of DBA who took over from Adrian Hunt in January, in an internal memo to pilots seen by FT Deutschland.
In the light of DBA's deteriorating financial health, the odds for a deal have come under increasing threat. In the internal memo Mr Wyatt also announced a "dramatic deterioration of results." Last week DBA announced that it had to reduce its capacity from 16 to 14 planes and cut 500 flights from its schedule in February and March due to weak demand.
DBA, which has a workforce of 860 and a fleet of 16 Boeing 737-300s, flies seven German domestic routes from Munich and Berlin and is launching a service from Hamburg to Nice at the end of March.